Health and Human Services Secretary Kathleen Sebelius has already suspended indefinitely implementation of the CLASS act — Obamacare’s Long-Term-Care Entitlement because it was financially unsustainable.

And as Jonathan Adler and Michael Cannon explain in today’s Wall Street Journal Obamacare has yet another major flaw that threatens its basic functioning:

Even if ObamaCare survives Supreme Court scrutiny next spring, its trials will be far from over. That’s because the law has a major glitch that threatens its basic functioning. It’s so problematic, in fact, that the Obama administration is now brazenly trying to rewrite the law without involving Congress.

The Patient Protection and Affordable Care Act offers “premium assistance”—tax credits and subsidies—to households purchasing coverage through new health-insurance exchanges. This assistance was designed to hide a portion of the law’s cost to individuals by reducing the premium hikes that individuals will face after ObamaCare goes into effect in 2014. (If consumers face the law’s full cost, support for repeal will grow.)

The law encourages states to create health-insurance exchanges, but it permits Washington to create them if states decline. So far, only 17 states have passed legislation to create an exchange.

This is where the glitch comes in: ObamaCare authorizes premium assistance in state-run exchanges (Section 1311) but not federal ones (Section 1321). In other words, states that refuse to create an exchange can block much of ObamaCare’s spending and practically force Congress to reopen the law for revisions.

The Obama administration wants to avoid that legislative debacle, so this summer it proposed an IRS rule to offer premium assistance in all exchanges “whether established under section 1311 or 1321.” On Nov. 17 the IRS will hold a public hearing on that proposal. According to a Treasury Department spokeswoman, the administration is “confident” that offering premium assistance where Congress has not authorized it “is consistent with the intent of the law and our ability to interpret and implement it.”

Mr. Adler and Mr. Cannon rightly point out the law’s proponents confidence is misplaced… Federal agencies can create rules — but they cannot amend or ignore statutes and the text of the law is perfectly clear, it does not allow premium assistance in federal exchanges.

Simply put without congressional authorization, the IRS lacks the authority to dispense tax credits or spend money… Not that has ever stopped Washington’s regulators from ignoring the will of Congress – just look at Avenal Power Center, L.L.C. v. EPA.

Anyway, the odds that a Republican controlled House will fix a fatal flaw in Obamacare are somewhere around slim and none… the odds aren’t much in the Senate either where many Democrats are facing tough reelection fights and aren’t going to want to go anywhere near one of the most unpopular and polarizing pieces of legislation in recent memory — especially after the trouncing they took in the mid-terms.

Bottom line, the Obama Administration will undoubtedly try to push through their regulatory fix for this flaw only to see it almost instantaneously tossed out in a court challenge.

Related:

• More Americans than not want health law repeal: poll – Reuters

I’m still reviewing the 200 plus page majority opinion from Judges Joel Dubina and Frank Hull, but here’s the conclusion summarizing the court’s findings:

We first conclude that the Act’s Medicaid expansion is constitutional. Existing Supreme Court precedent does not establish that Congress’s inducements are unconstitutionally coercive, especially when the federal government will bear nearly all the costs of the program’s amplified enrollments.

Next, the individual mandate was enacted as a regulatory penalty, not a revenue-raising tax, and cannot be sustained as an exercise of Congress’s power under the Taxing and Spending Clause. The mandate is denominated as a penalty in the Act itself, and the legislative history and relevant case law confirm this reading of its function.

Further, the individual mandate exceeds Congress’s enumerated commerce power and is unconstitutional. This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives. We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers. “Uniqueness” is not a constitutional principle in any antecedent Supreme Court decision. The individual mandate also finds no refuge in the aggregation doctrine, for decisions to abstain from the purchase of a product or service, whatever their cumulative effect, lack a sufficient nexus to commerce. [fn omitted]

The individual mandate, however, can be severed from the remainder of the Act’s myriad reforms. The presumption of severability is rooted in notions of judicial restraint and respect for the separation of powers in our constitutional system. The Act’s other provisions remain legally operaive after the mandate’s excision, and the high burden needed under Supreme Court precedent to rebut the presumption of severability has not been met.

While this is welcome news I wouldn’t celebrate just yet, we’ve still got a long way to go. If nothing else this ruling makes it more likely that this case is headed to the Supreme Court.

Random thoughts:

• Nancy Pelosi wasn’t kidding when she said we had to pass it to find out what was in it… The majority opinion is 207 pages long, most of it is devoted to explaining how the law the works.
• This is the first time a judge appointed by a Democrat has ruled against the individual mandate… Judge Hull was appointed by Bill Clinton, while Judge Dubina is a George H.W. Bush appointee.
• The court didn’t buy the Obama administration’s argument  that the individual mandate is an exercise of the governments taxing powers.  I might be wrong on this, but I think every court that’s considered the matter has ruled against the government on that point.
• The Court points out on page 171 that if it were to accept the Obama administration’s interpretation of the Commerce Clause would mean a limitless federal power:
  

  The federal government’s assertion of power, under the Commerce Clause, to issue an economic mandate for Americans to purchase insurance from a private company for the entire duration of their lives is unprecedented, lacks cognizable limits, and imperils our federalist structure.

• The court basically punted on the issue of severability:
  

  The presumption of severability is rooted in notions of judicial restraint and respect for the separation of powers in our constitutional system. The Act’s other provisions remain legally operative after the mandate’s excision, and the high burden needed under Supreme Court precedent to rebut the presumption of severability has not been met.

  Maybe I’m missing something, but it’s my layman’s understanding the standard for “presuming” something being “severable” in a law is that it includes a specific severability clause. Regardless from what I remember, the government’s argument to Judge Vinson was that the individual mandate was not severable, it was necessary for the law to function as intended.

The complete ruling is here.

The federal government Tuesday granted Maine a waiver of a key provision in President Barack Obama’s health care overhaul, citing the likelihood that enforcement could destabilize the state’s market for individual health insurance.

The U.S. Health and Human Services department said in a letter it would waive the requirement that insurers spend 80 cents to 85 cents of every premium dollar on medical care and quality improvement. Instead, the letter said, the state could maintain its 65 percent standard for three years, with the caveat that HHS intends to review the figures after two years.

The decision makes Maine the first state to receive a waiver of the requirement. Similar requests are pending from Kentucky, Nevada and New Hampshire.

There’s a lot of things I could say here, but instead I’m going to point you to Jon Hall’s American Thinker piece ‘Waiving’ goodbye to the Constitution. Mr. Hall very rightly points out that these waivers go to the very heart of what “a nation of laws, not men” is all about. In short, they violate the Constitution’s equal protection clause… As Mr. Hall notes: “The law is the law only if it applies to everyone.”

The U.S. Justice Department told a federal judge in Florida it will appeal his Jan. 31 decision striking down President Barack Obama’s health-care reform legislation.

Federal lawyers today filed a notice of appeal with U.S. District Judge C. Roger Vinson in Pensacola. Their submission comes two days before a deadline imposed by the judge last week, when he put on hold enforcement of his ruling.

In January, Vinson became the second federal judge to find unconstitutional a provision of the Patient Protection and Affordable Care Act requiring almost every person in the U.S. to obtain insurance coverage starting in 2014.

Judge Vinson’s ruling was one of two that have found Obamacare’s individual mandate unconstitutional, his ruling goes much father than Judge Hudson’s ruling the Virginia case though, and strikes the entire health care reform law.

Today’s notice of appeal moves the proceedings to the Court of Appeals for the 11th Circuit in Atlanta, Georgia… It’ll be several months before the 11th Circuit issues a ruling, after that it’s off to the U.S. Supreme Court.

Previous

• Judge Vinson to Obama Administration: Quit Stalling, Either File the Appeal or Stop Implementing Obamacare
• Breaking: Florida District Court Rules Obamacare Unconstitutional

The number of temporary healthcare reform waivers granted by the Obama administration to organizations climbed to more than 1,000, according to new numbers disclosed by the Department of Health and Human Services.

HHS posted 126 new waivers on Friday, bringing the total to 1,040 organizations that have been granted a one-year exemption from a new coverage requirement included in the healthcare reform law enacted almost a year ago. Waivers have become a hot-button issue for Republicans, eager to expose any vulnerabilities in the reform law.

That’s right folks the Department of Health and Human Services granted 1,040 temporary waivers from burdensome requirements of the President’s signature piece of legislation.

So who’s getting all these waivers? According to the Centers for Medicare and Medicaid Services web site the waivers have gone to Self-Insured Employers (423), Health Reimbursement Arrangements (322), Multi-Employer Plans (237), Non-Taft Hartley Union Plans (23), Health Insurance Issuers (29), State-Mandated Policies (4) and Association Plans (2). You can see the full list here.

The Obama administration got a well-deserved rebuke today from Judge Roger Vinson in the Florida lawsuit challenging the constitutionality of Obamacare (aka the Patient Protection and Affordable Care Act as big government types insist). Judge Vinson issued a new order in response to a bizarre and obtuse “motion to clarify” that the Department of Justice (DOJ) filed on February 17.

Vinson’s original order on January 31 could not have been clearer: He declared the entire law unconstitutional and specifically said that because he presumed that officials of the executive branch would adhere to the law as declared by a court, his declaratory judgment striking the law down was the functional equivalent of an injunction. Judge Vinson wrote then that he presumed that the executive branch would follow his order, which any lawyer (including a lawyer President) would know requires them to cease implementing Obamacare with respect to the 26 states that are plaintiffs and the National Federation of Independent Business. That turned out to be a faulty presumption, indeed.

After waiting more than two weeks, the Obama Administration filed an insulting motion that essentially said that the federal government would not comply with the judgment unless Judge Vinson issued another order “clarifying” that he really meant what he said – that the executive branch was enjoined from implementing this unconstitutional law. This was a political motion, not a legal motion that any serious litigator would file. In fact, Judge Vinson said that if the government was really unable to understand his original order, “[i]t was not expected that they would effectively ignore the order and declaratory judgment for two and one-half weeks, continue to implement the Act, and only then filed a belated motion to ‘clarify.’”

In short, Judge Vinson just told the Obama Administration to quit stalling and either the appeal or stop implementing Obamacare. The key paragraph in Vinson’s order is here:

After careful consideration of the factors noted above, and all the arguments set forth in the defendants’ motion to clarify, I find that the motion, construed as a motion for stay, should be GRANTED. However, the stay will be conditioned upon the defendants filing their anticipated appeal within seven (7) calendar days of this order and seeking an expedited appellate review, either in the Court of Appeals or with the Supreme Court under Rule 11 of that Court.

Ouch, the government asked for clarification… and they got it along with a trip to the woodshed. The government now has 7 calendar to days file it’s appeal on an expedited basis or stop implementation of Obamacare.

I should note Judge Vinson’s ruling forces the Department of Justice to expedite the appeals process, something they were clearly hoping to avoid.  The DoJ was apparently hoping to stall appellate action on Judge Vinson’s ruling in the hopes getting a friendlier set of rulings that would allow them to marginalize Vinson somewhere down the road. Instead they have fight Vinson’s ruling now rather than later.

Related

• Judge hardens health ruling, then delays it – Lyle Denniston, SCOTUS Blog
• Breaking: Vinson stays ruling on ObamaCare – but just for seven days – Ed Morrissey, Hot Air
• Judge Vinson Fails to Apply the Two-By-Four – David Catron, American Spectator

Today’s ruling in a lawsuit filed the attorneys general and governors from 20 states is similar to the ruling issued by Judge Henry Hudson in December, which found the individual mandate violates the Constitution. Judge Vinson’s  ruling goes further and effectively strikes down the entire Health Care Reform law — which because of the hasty way in which the law was cobbled together lacks severability.

I’m still waiting for a copy of the ruling, but David Weigel points out the money graf:

Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void. This has been a difficult decision to reach, and I am aware that it will have indeterminable implications. At a time when there is virtually unanimous agreement that health care reform is needed in this country, it is hard to invalidate and strike down a statute titled “The Patient Protection and Affordable Care Act.”

Frankly, I’m not the least bit surprised by Judge Vision’s ruling, the President’s health care reform was cobbled together and rushed through Congress in manner that paid little or no attention to the will or concerns of the people and ignored Constitutional limits on governmental power.

Now would be a good time for the President and congressional leaders to admit “The Patient Protection and Affordable Care Act” is bad law and repeal it. They can can then begin work on a replacement that can crafted in the full light of day.

Update: The Heritage Foundation notes:

Today’s decision should be a major source of concern for the Obama administration for at least five reasons.

First, the parties involved. This case involves a majority of the states (26), and the National Federation of Independent Business.  If not completely unprecedented, the very fact that more than half the states marched into federal court on behalf of themselves and their citizens to challenge an unconstitutional federal program falls into the category of “beyond any recent memory.”  The sheer magnitude of the parties involved guarantees that the courts on appeal will pay particular attention to this case.

Second, the case creates a very bad trend for the administration.  Those courts which have taken the time to more fully develop the record in the case, and to have more briefing and hearings (Virginia and Florida), have ruled Obamacare unconstitutional.  This is important because, contrary to the White House spin, litigation is not a scoreboard.  It is not enough to say that you have won some and lost some.  Some district court wins “count” more, because they are more indicative of what is likely to come next.  Here, the cases the administration has lost have been better developed, have significant and sophisticated parties, and are in a better position for appeal than the more cursory cases that they have won at more preliminary stages.

Third, the case strikes down the whole of Obamacare based on the unconstitutionality of the mandate.  The administration has tried to have it both ways on this one, with the President and key proponents arguing how essential the mandate is, while the Justice Department arguing at times that it was absolutely essential, and at times that it was severable.  If the DOJ really wanted to keep the bill severable, perhaps they should not have argued in court that removing the mandate while maintaining the remaining requirements of the bill would “inexorably drive [the health insurance] market into extinction.”  Those who would falsely accuse the Judge of overstepping his bounds must recognize both the standards for severability, which he properly applied, and the damning concession made on this point by the Justice Department.

The fourth problem for the Obama DOJ: Judge Vinson’s decision is thorough, well-reasoned, and likely will be very persuasive to appellate judges, and eventually Justices, who review the case.  He was judicious, ruling against the states on the spending clause claim and for them on the Commerce Clause.  The most important document in any appeal is the decision below, and Judge Vinson’s will give the court of appeals much to consider.  Put simply, Vinson has just made the Obama DOJ’s job much more difficult.

The fifth problem, the Judge granted declaratory relief to the parties, which includes 26 states.  Because the entire act was struck down, the future requirements to expand Medicaid programs will be suspended, at least as to these 26 states, and these states will be relieved of their obligation to make plans for such expansion in the immediate future.  At a time when many states face insolvency, the removal of this burden is welcome news.  The Obama administration, rather than fight the relief for these 26 states, should extend it to all 50 until the case is finally resolved.

Update II:  Sen. Jim DeMint tweets:

All Republican Senators have now joined to cosponsor the bill to repeal ObamaCare, S.192

Update III: The DOJ is preparing to appeal Judge Vinson’s ruling and the White House has described the ruling as “odd and unconventional” and “overreaching“… Funny, I’d call Obamacare a grossly overreaching federal power grab that ignores Constitutional limits on federal power.

Related

• Key Excerpts From Monday’s Health-Care Ruling – Wall Street Journal Law Blog
• Judge uses Obama’s words against him – Washington Times
• The Constitutional Moment – The Wall Street Journal
• ObamaCare and the Two Kennedys – William McGurn, Wall Street Journal

from The Wall Street Journal:

A federal district judge sided with the state of Virginia in its challenge to the health law passed in March, saying Congress exceeded its “constitutional boundaries” when it required most Americans to carry health insurance or pay a fine.

Judge Henry E. Hudson of the Eastern District of Virginia said the provision in the bill, known as the individual mandate, “would invite unbridled exercise of federal police powers.”

The ruling is perhaps the most significant so far among a slate of state-based legal challenges to the law, which faces a broad attack by newly resurgent Republicans in Congress. More than 20 federal lawsuits have been filed against the health overhaul since President Obama signed it in March. The individual mandate doesn’t take effect until 2014.

Judge Hudson’s ruling deals serve blow to health care reform advocates. Saying in part:

“Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market,” he wrote. “In doing so, enactment of the [individual mandate] exceeds the Commerce Clause powers vested in Congress under Article I .”

Judge Hudson’s ruling will undoubtedly be appealed. A separate suit filed by 20 states still pending before federal Judge Roger Vinson in Pensacola, Fla., who will hear arguments in the case on Thursday.

FOX News contributor Tracy Byrnes sums things pretty well:

“The bottom line here is that they gave out waivers is an admission of guilt. Basically they’re saying, “You’re right. We screwed up.” That’s the bottom line here. They did not create a law that benefits all of us.”

Heh, they didn’t pass a law that benefits any of us… If this turkey isn’t repealed it will ultimately destroy private health insurance and private health care in this country.

You can view the list chosen few on the HHS web site.

I should also mention that out of the 375,000 or so Americans with pre-existing conditions HHS said would apply for coverage in the first year of ObamaCare only 8,011 have done so.

WASHINGTON – AARP’s endorsement helped secure passage of President Barack Obama’s health care overhaul. Now the seniors’ lobby is telling its employees their insurance costs will rise partly as a result of the law.

In an e-mail to employees, AARP says health care premiums will increase by 8 percent to 13 percent next year because of rapidly rising medical costs.

And AARP adds that it’s changing copayments and deductibles to avoid a 40 percent tax on high-cost health plans that takes effect in 2018 under the law. Aerospace giant Boeing also has cited the tax in asking its workers to pay more. Shifting costs to employees lowers the value of a health care plan and acts like an escape hatch from the tax.

Heh, I wonder how long it’ll be before the AARP lobby’s the Obama administration for a waiver from the wondrous health care reform law they helped ram down America’s throat.